America's Fracking Economy Isn't Helping Anyone

Senior Editor

Historians believe that the earliest oil wells were drilled in China in 350 AD, nearly two thousand years back. One thousand years ago, around the 10th century, humans built a massive network of pipelines out of bamboo to connect them. About the same time, our ancestors started using natural gas and oil for lighting and heating. By 1753, people were mapping oil springs in the United States.

Yet in our nearly two thousand years of experience with oil extraction, we still haven't figured out one simple factor: how to extract the stuff in a way that benefits the entire community, and not just the guy who owns the well. Our history is also littered with boomtowns and ghost towns, exploitative oil barons, and lingering resource curses—it is extremely difficult, it turns out, to drill for something and responsibly share it with everyone.

Today, in the age of fracking, we're just as eager to buy the resource extractor's line—now typically delivered by a multinational conglomerate—as we've always been. Let us drill, they say, and jobs and prosperity will follow. Modern day boom towns have sprung up across the country, in the fracking fields of North Dakota, Montana, Wyoming. The nation cheers for Keystone XL, because its proposers say it will create jobs—even though independent studies have calculated it will yield as few as 20 permanent jobs.

But as has been the case with oil extraction and distribution operations throughout history, practically the only people who truly benefit in any sustainable manner from resource extraction are those who own the drills. The same is true in boom-states.

The Social Science Research Council has released its decade-spanning Measure of America, which attempts to map the welfare of the nation since the turn of the century. It notably revealed that Connecticut and Massachusetts boast the highest standards of living, and that Michigan was the only state to see living standards decline since the year 2000. Yet some of its most telling findings concern the growth of states home to skyrocketing resource extraction.

"Resources like natural gas enabled states such as New Mexico, Montana, and West Virginia to avoid the earnings losses most other states faced between 2000 and 2010," the authors write. "But their Human Development Index rankings remained low; valuable natural resources do not automatically fuel improvements in people’s well-being."

The authors are articulating a phenomenon that's already well enough known to be considered common sense. Sure, natural resource wealth can translate into a nationwide boon, offering citizens access to health and social services and higher quality of life, as it has for oil-rich Norway. But usually, states opt for a nation-spanning boomtown model, as Nigeria has. Elites and corporations store up the wealth, little trickles down.

The social scientists use Louisiana as an example of how this plays out in the United States.

"Considerable economic activity is not translating into expanded well-being and opportunity for residents," the authors explain. "For example, while Louisiana is seventeenth in GDP, it has very low levels of human development, ranking forty-sixth."

In other words, Louisiana should be the 17th richest state. Instead, its residents live as though it were nearly the poorest. Many of the nation's oil refineries are there, as is access to the oil-rich Gulf of Mexico. A lot of money flows through its cajun coffers, but little makes its way to health care or social services for those not fortunate enough to get a piece of the pie. The same is true of other resource-rich states—after Louisiana, the widest disparities between GDP and actual quality of life are found in Alaska, Wyoming, Oregon, and Texas.

"A resident of Vermont … can expect to outlive a Louisianan by nearly half a decade and is half as likely to lack a high school diploma," the authors note. "Despite huge disparities in terms of market activity, the typical worker is earning nearly the same amount in both states, about $27,000."

Vermont ranks 34th in the nation for GDP, yet its residents live as richly, on average, as almost anyone. Why? The state has prioritized health care access, has relatively flat income levels, and fairly robust social services. It's simply a better place to be a citizen.

Yet we're in the process of rigging up a bunch of newfangled Louisianas—hydraulic fracturing has allowed oil and gas companies to access resources much more cheaply, and towns, cities, and states are opening their doors to the rush. North Dakota is a bona fide fracking-fed boom-state, and Wyoming and Montana are close behind. And despite the promises of prosperity we've heard—and ignored—so many times before, none of the boom-states are actually becoming roundly prosperous.

"Fracking boom towns have seen skyrocketing rents; poor, overcrowded living conditions and housing shortages;traffic, sanitation, and other environmental impacts; increased violence among workers and against women; and problems with substance abuse," says the report. "...the concentration of young, transient men in boom towns has created an atmosphere that many women and long-time residents find threatening. Thus, the picture is mixed at best."

That's the hallmark of the boomtown, same as it ever was—a mixed picture at best. It's not impossible, of course, to take advantage of resource wealth in a responsible, collectively beneficial way. Again, see: Norway. Or Botswana. But the sense of impermanence that pervades resource a boomtown and, now full boom-state operations, makes building a durable social structure less than a priority. It makes it easier for the corporations drilling and pumping the resources to exploit workers, to keep the lion's share of the profits, to maintain minimal responsibilities to the communities it is extracting from.

Here, in this extensive report, we've got further evidence that resource extraction rarely improves society as a whole—despite the new techniques and tech involved. A boom-state in 2013 still looks a lot like a boomtown did in 350 AD. Some things never change.